We are experiencing seismic changes in the tech industry driven by the convergence of social, mobile, analytic and cloud (SMAC), the change in technology consumption, Digital Transformation (DX) and the Internet of Things (IoT).  As an industry we have seen massive disruption before, but this one seems to be different in that business models have fundamentally changed from selling and buying stuff to responding to how customers consume technology and how it is changing their businesses.   Some of the impact:

  • Channels are consolidating; 30% decline in the number of partners transacting since 2008 according to Association of Strategic Alliance Professionals.
  • 70-80% of IT products & services continue to be sold through channels in North American market according to 2016 CompTIA study.
  • Greater competition for channel partners because of convergence of partner types – for example:  Traditional Solution Providers and Agent Channel
  • Emergence of influence / affiliate channel models and new partner types including marketing and digital agencies,  accounting firms, private equity companies, and HR firms.
  • Traditional IT/Networking Solution Provider transforming his/her business models to accommodate for Cloud, IOT, SDN and other new SAAs applications.

There is also a new buying paradigm; the line of business manager is in the driver’s seat and their motivations are keenly focused on business outcomes. IT in certain software applications and solutions may be an influencer, or taking a back seat in the sourcing of technology solutions.  Similar paradigm shifts are also happening for infrastructure vendors who are revitalizing their organizations around business value, software, and not allow themselves to become a plug and play commodity.

The conversation is also shifting regarding who is a vendor, who is a partner, and who is a customer. Vendors may be hardware, software, or Services Company and the channel may be cloud providers, master agents, solution providers, or some combination of these business models in one organization.  Vendors, service providers, and solution providers are partnering together to create additional value for the end customers and also to ensure long term solvency and success.

All of these trends, changing business models, and buying dynamics amount to an incredible transformation happening in our partner ecosystems.  We must rethink how vendors and partners go to market as an ecosystem. Partners once on the fringes are now more powerful as influencers. Often, they are becoming orchestrators of the ecosystem and with their established strong customer relationships and trusted advisor positions are diversifying their revenue streams to incorporate managed services, API innovation and integration.

As we see more and more consolidation in the traditional IT channel, we see an influx of new players centered on particular industries.  For example, GE Digital is becoming a powerhouse in IoT and industrial transformation. There are over 1000 new VC funded entrants into the IoT space.  This is a space where digital transformation and IoT require a more verticalized approach and level of expertise. It’s important not only to talk business outcome, but frame it in the language of the customer’s vertical industry.

So what does this mean for companies seeking to transform their current partner ecosystems to meet the challenge?   TCC & Phoenix Consulting Group have recently engaged in extensive research to understand how companies are evolving the next generation of partner ecosystems.  We have interviewed partnering professionals across a Who’s Who in the ICT industry to understand their perception of the challenge, and what they are doing to respond.  Here are three key evolutionary trends:

  1. Organization.  Vendors are compelled to think more holistically about how they go to market and their different routes to market.  As partners are adopting a more blended business model of services, IP, and recurring sales, companies need to breakdown the silos between what was traditionally channels, ISVs, alliances, and services.  Companies are beginning to organize their various partner communities under a single reporting structure, a single partnering framework, and a unified partner program.
  2. Recognizing the Value. Partner programs need to restructure to go beyond volume sales and traditional value elements — but instead reward value delivered to the customer across all the business models that a partner builds around the vendor. Recognizing value extends to rewarding value through changing incentives.  Vendors can no longer subsidize partner profitability through back end rebates or discounts. They are seeking to reward skills, competency, vertical expertise, customer relationship, and sustained engagement – promoting behaviors that are leading indicators for partnership success.
  3. Encouraging P2P Collaboration.  Since no one vendor, no one partner can deliver on these new complex solutions in DX or IoT, working together effectively is a premium competency.  Many of these solutions are custom assembled for each customer and the constellation of partners may be different for each opportunity. A new model of more agile, more ‘block chain’ partnering is required that is trust based.  It becomes easy to set up for an opportunity, and refine or disengage from deal to deal.

In a very complex and changing landscape, we believe vendors and partners who commit to getting partnering right; building a DNA to succeed with partnerships over the long run; and make it a core tenet of their company strategy will achieve competitive advantage and success through the waves of change in the coming years


About the Authors:

Theresa Caragol is founder and principal consultant of Theresa Caragol Consulting, LLC, and Achieve Unite a strategic advisory firm that provides business acceleration services to global enterprises including partner and channel development, go-to-market planning, M&A channel integration and executive learning forums. She has more than 20 years’ experience in building and managing multi-million dollar indirect channel teams and strategic alliance business and programs from inception to sales success. Prior to founding TCC, Theresa held senior executive roles at Extreme Networks, Ciena and Nortel.

Theresa is passionate about coaching employees and mentoring young people into STEM fields. She is honored to be one of 15 women selected for the First Leadership Foundry in Washington, DC – an organization dedicated to mentoring and recruiting women for positions on corporate boards. Theresa has received numerous IT industry channel accolades recognizing her work including:  2014 CRN Top 50 Most Influential Channel Chiefs, 2013 CRN Top 10 Next Generation Channel Leaders, 2015 Golden Bridge Gold Award for Best Program Leader.

Theresa graduated with honors from Virginia Tech University. She has an MBA from the University of Wisconsin’s Lubar School of Business, and holds an Executive Master’s degree in Leadership from Georgetown University’s McDonough School of Business.

Norma Watenpaugh is the founding principal and CEO of Phoenix Consulting Group ( which provides partnering and collaboration consulting services with expertise in partnering strategy, multi-channel and alliance management, and ecosystem development. Prominent clients include, Adobe Systems, Cisco Systems, Dupont, Intel, PayPal, Microsoft, SAP, and Xerox. Norma has taught alliance seminars for Duke Corporate Education, the Reuters Foundation, Digital Vision Fellowship Program at Stanford University, San Jose State University Professional Development, the American Management Association, and is a frequently requested guest lecturer and speaker at industry events. Norma has been a Board member of the Association of Strategic Alliance Professionals since 2003 and former Best Practices Committee Chair. She has led the organization in developing the CA-AM and CSAP professional credentials and in revitalizing the ASAP Handbook of Alliance Management: A Practitioner’s Guide. She currently leads the US delegation to the ISO standards committee for Collaborative Business Relationship Management. In 2015, she was named a Woman of Influence in Silicon Valley by the Silicon Valley Business Journal.

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